Spending deals signal end of unpopular Obamacare cost checks

Republicans and Democrats finally found something they can agree on about Obamacare: killing unpopular policies that were supposed to pay for the law or reduce health costs.

The recent congressional spending deals repealed or delayed several Obamacare taxes, as well as a Medicare cost-cutting board. Removing those powerful levers, which terrified health providers and unions, is not a good omen for efforts to control health spending, which is expected to surge in the next few years.

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“This was a skillful effort by the groups that would have faced the sharp end of these measures,” said John McDonough, a former Senate HELP Committee aide who helped draft the law, who is now a Harvard professor of public health practice. “The reason people got so exercised … is not because they wouldn’t have been effective. They would have been effective.”

What’s left are the expensive pieces of the law that are liked by all Democrats and just enough Republicans — protections for people with pre-existing conditions and an expansion of Medicaid, among many other provisions. Though that’s relieved lawmakers of having to make tough choices and risk antagonizing consumers and business interests, it’s cast doubt on the idea of meaningful cost controls with U.S. health spending on track to soar from about $ 3 trillion a year to approximately one in every five dollars of total public and private health spending, or $ 5.7 trillion, by 2026.

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Douglas Elmendorf, who led the Congressional Budget Office during the enactment of the health law, said both of the scrubbed policies would have helped Americans get more value out of their health spending.

“The U.S. still spends way more on health care than other countries even adjusting for our higher average income and there is very little evidence that we’re getting that much more value relative to other countries,” Elmendorf said. He chided Congress for not rolling out the policies now that the tough votes are years behind them.

“It’s hard to get things into law,” he said. “It shouldn’t be that hard politically to let things that are already in law take effect.”

Democrats defend their role — and their openness to changing the health law.

“You need to be open to amending the Affordable Care Act and if there were cost controls that were ultimately ineffective or unnecessary, I think you have to be open to getting rid of them,” said Sen. Chris Murphy (D-Conn.), one of the Senate’s most ardent Obamacare supporters. “The cost of the Affordable Care Act is coming in at much less than what was estimated, so that gives you some room to take a look at some of the expected revenue sources.”

The cost controls drew an array of powerful opponents. Trade groups across the health care industry and their allies in Congress railed against the Independent Payment Advisory Board, even though it never actually met, because the panel could have gained significant authority to cut payments to providers to control Medicare spending. The “Cadillac tax” on high-cost health care plans was disparaged by powerful employer groups and unions because it took aim at the popular health care benefits they give their employees.

Congress has twice delayed the Cadillac tax, which is now due to go into effect in 2022. But lawmakers and aides admit those moves are strong signs that Congress will enact more delays or completely repeal the policy.

The only visible support for the cost controls came from economists who were easily drowned out by high-priced lobbyists.

“Aside from the lost tribe of health care economists out in the desert, somewhere in the Mojave Desert, I don’t hear a business organization, I don’t hear a medical professional organization” defending these policies, McDonough said. “I don’t even see consumers or labor or anyone out there.”

The economists take the long view, arguing that a surtax on workers’ gold-plated coverage would gradually prod them to make smarter decisions about pursuing less expensive care. The Medicare cost-cutting board, they say, would have taken the always-dicey task of controlling Medicare costs out of the hands of politicians fearful of facing disgruntled seniors.

Sen. Tim Kaine (D-Va.) said the rollbacks wouldn’t have happened if Democrats controlled even one chamber of Congress.

Striking the cost controls was part of the trade-off needed to get GOP concessions “to get better treatment for opioids or better treatment in the VA or the six years to 10 years for CHIP,” he said, citing provisions of the recent spending bills. “There are some tough aspects of being in the minority.”

Cutting those deals was easier because health spending has slowed since the Affordable Care Act became law, making cost controls appear less critical thanin 2009 and 2010. It’s still unclear exactly what drove that trend: Some economists say people are less likely to pursue non-urgent care when the economy is bad. Others believe the law created efficiencies in the health system that reduced costs.

Either way, the spending slowdown may not last long.

The CMS actuary said this week that American health care spending will grow from 4.3 percent in 2016 to 5.3 percent this year and 5.7 percent by 2021. Much of that increase will be driven by aging baby boomers in need of more medical care.

The CBO said in 2010 that both the IPAB and Cadillac tax would have saved the government money, had either been activated. The Cadillac tax would have raised $ 12 billion this year and another $ 20 billion next year. IPAB would have saved $ 15.5 billion between 2015 and 2019.

But in 2010, even Elmendorf andthe staid CBO scorekeepers — accustomed to the reluctance of Congress to cut health spending — foreshadowed congressional ambivalence over letting the controls take effect.

“The long-term budgetary impact could be quite different if key provisions of the legislation were ultimately changed or not fully implemented,” the agency warned.

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